Confidence Waning Further in Italian Bonds

11/10/2011 3:52PM

Smart Money's Jack Hough makes a stop on Mean Street to discuss Italian bonds and their yield spike this week. He says the yield increase may spread because the attractiveness of the bonds has dropped even more. Photo:GIUSEPPE CACACE/AFP/Getty Images

This transcript has been automatically generated and may not be 100% accurate.

I ... Jack L ... SmartMoney's joining us ... to explain the wonderful world of Italian and Greek debt even better than commercial ... what might be a much better than the Komodo and thank you ... so well um ... Greek and Italian debt union and don't don't don't run down to buy Italian bonds again nice to see Senseo not wanting and ... are relying on Internet is Severson yielding the spread between the the the German bunds ... and EPM the Italian bond of five six hundred basis points on the is that is too good to be true ... I think it I think it's deserved and maybe there's even a little more this deservedly drill ship going on ... and these are government bond markets what happened in Italy is fallout from what was proposed in Greece in what was proposed in or is ... he will mark down what we all by half and will call it a voluntary reduction not in the fall and a reason for that is ... they don't trigger payments on all this bond insurance of the world's gone crazy for these credit default swap rise but the outstanding Africa but the number was was was come a small number ... the notional amount of credit default swaps over the Greek debt was was really was only a few billion Domesek four five billion dollars and total outstanding debt of a hundred twenty billion or something like that so ... he wasn't ... he wasn't that big night I think in the case to Greece but what happens when you can change the rules during the game well that's that's a different court he had that people have these ... people think they have this the fault insurance on on on the spines and if they don't suddenly they lose confidence in it for the rest of the world so ... one talk is immaculately last week the resentment of Italian bonds and a six percent yield ... look at the pricing for the credit default swaps ... another four percentage points at the Gellert at the time by the idea that it may only want a seven day that the identity of the real heart of the manager Jeanette ... do you believe ... in the credit default swap market when it comes to sovereign debt and when I mean by that is ... puerile I mean why are people ensuring everything is a crazy idea to measure ... the number that they and the government is this the economy of what the new one better I think bond insurance in general I think it's like that for people claimed we've seen in a match for really exists ... look what happen in the municipal bond market in the United States right we have ... now for the first countries we've had a mechanism to deal with credit risk in charge higher reaches for its right ... so long calm bond insurers this and we've got a deal that we get the secret sauce the eighties high interest rates ... by the entrance from Ostling yours friendly way down and you know where does the wrist where does the money goes that's not a business model it's a magic act history gonna win in a small bomb market I think what happen in Italy would reflect that people are losing confidence that the government bond market as well ... Jack now of SmartMoney thank you very very much ... a remake of Becton's bonds and think ...